A founder focused approach...
Effectuation
Effectuation adopts the belief that YOU and those around you have unique resources to bring to your venture.
What is Effectuation?
Effectuation is one of the most powerful approaches to entrepreneurship, as well as the most intuitive. Instead of beginning with a fixed goal, effectuation starts with leveraging your existing means and allowing goals to emerge contingently over time. There are 5 key practices within effectuation that you can learn more about at Effectuation.org.
At the Founder Challenge, we highlight the 3 most critical
Bird in Hand
This first principle of effectuation relates to the medieval proverb that professes the power recognizing the value of what you have now versus what you could have later: it's better to have a bird in the hand than two in the bush!
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While many of us don’t think we have resources, or in fact may come from very modest or disadvantaged means. The biggest advantage each of us has is by beginning within who we are, what we know, and who we know.
Who am I?
Effectual entrepreneurs consider their inherent personal qualities as their set of resources from which they imagine potential business goals. They take stock of what makes them the unique individual that they are, and ask "how can I use this to make something happen."
Perhaps you had a distinctive upbringing with experiences that few others have had. On the other hand, you might have a specific social identity that allows you to understand a certain group of people and the issues they face. Consider your life experiences and allow them to shape the direction of your venture.
What Do I Know?
Regardless of who you are and where you come from, you have plenty of unique information and experiences that no other individual has. You can and should use this to help move your venture forward.
You can take a quick inventory of yourself and your passions to help determine what unique knowledge you can leverage. Did you minor in a lesser-known subject in college? Have you worked a job that few people have experience in? Did you have any strange or specialized hobbies when you were a child?
Pre-existing knowledge is perhaps your greatest strength in effectuation because it cannot be replicated by anyone else and is inherent to the individual founder.
Who Do I Know?
While this one may seem quite straightforward, it's far from it. I don’t know Jeff Bezos or Oprah Winfrey and I'm betting neither do you. And that’s ok. Two clues to get you started:
What types of people are you connected with? Or what communities are you a part of?
Are your friends gamers? Do you know a lot of athletes? Are you from a long line of immigrants from a particular country? Is all of your family involved in running convenience stores?
Maybe you have grown up in a particularly challenging environment--you still know valuable people that can be a building block for new projects! Consider the micro neighborhood you were a part of. Maybe if you were to launch a business or service, it could meet the needs of a community like that neighborhood that you are really familiar with. Who do I know is the power of leveraging your specific communities of people.
Co-Creation (or Quilting)
Under effectual reasoning, founders focus on forming strategic partnerships (collaboration) over competition. Effectual entrepreneurs seek to co-create or quilt together resources toward their vision. Professor Sarasvathy at UVA Darden has put forward this idea of quilting as it an important distinction from a puzzle. With a puzzle, you simply have to find the "right" piece or as a startup founder, person or investor to make your venture happen. If instead you are quilting, any piece you find may play a role in you achieving a collective vision. So that employee you hired to do the website might also have ways to help you with sales that you never considered!
Professor Sarasvathy will often say, measure the success of your venture, based on who you can bring on board. If you are sharing your vision with others and they want to chip-in, you are probably on the right track. It all begins with what she calls the Effectual Ask. You might be founder, but the entrepreneurial journey is never viewed as a solo mission in effectuation!
Affordable Loss
One of the biggest impediments to people getting started with their venture ideas is the fear that they could loose it all! We often think of Entrepreneurship as taking the "Plunge." But the reality is that most entrepreneurs have rationally chosen that pursuing the opportunity will bring them more joy than the alternative.
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You can make this choice too, with the help of determining your Affordable Loss. Your Affordable Loss is what you are will to commit (and loose) to starting your venture. For the founder of this webpage, that was making the choice to focus his time on this webpage for the summer and the certain amount of money to get the page off the ground. If the resource turns out less useful, the cost is quantifiable as just that.
In traditional business, leaders are tasked with minimizing costs and maximizing returns. Entrepreneurs can't follow this playbook. Instead, entrepreneurs can gain better control of their venture process by pre-determining their Affordable Loss, so they can jump into their venture process fully committed by knowing their downside.
